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Cyprus 7th in citizenship by investment

Cyprus has emerged as one of the most popular jurisdictions for EU and non-EU nationals in the Citizenship by Investment Index, published by Financial Times group’s Professional Wealth Management.

CYPRUS ranks 7th out of 12 countries studied in an analysis of citizenship-by-investment programmes by the Financial Times group’s Professional Wealth Management, ahead of Malta, Bulgaria and Austria, the other European Union member states on the list.

The research group ranked Dominica as the top jurisdiction in scope of the study, scoring an overall 90 per cent, with St Kitts and Nevis trailing with 88.

Third, with 85 per cent, was Grenada, with Antigua and Barbuda (78), Saint Lucia (76), and Vanuatu (76), following in the next three spots.

Cyprus scored 67 per cent overall, Comoros 66 and Malta 64 per cent.

The rankings were devised as the aggregate of seven indicators: freedom of movement, standard of living, minimum investment outlay, mandatory travel or residence, ease of processing, citizenship timeline, and due diligence.

On freedom of movement, Cyprus scored 9 out of 10, with only Austria and Malta getting top marks.

“Benefits for acquiring citizenship in Cyprus includes freedom of movement and residence in any other European Union member state, although it does not occasion membership of the Schengen Area,” the report said of the island’s naturalisation by exception scheme.

“Citizens may avail themselves of visa-free travel to around 160 countries.

In terms of standard of living, the island scored 8, again with Austria and Malta scoring highest, 9.

Cyprus’ was second-to-last in minimum capital outlays – the capital that needs to be tied up for citizenship – with 2 out of 10, with only Austria scoring worse (1) and Comoros, Dominica and Saint Lucia getting a perfect 10.

“The current scheme was unveiled in 2014, and last amended in late 2016 by the nation’s Council of Ministers. All applicants for citizenship must purchase real estate valued at €500,000, and declare that real estate as their permanent residence. They then have a choice of three options in which they must invest €2m.”

“Applications for citizenship under the scheme are processed by the Ministry of Interior and are further subject to application and processing fees,” the report read.

“The applicant must be a resident permit holder at the time of application, otherwise an application for residency may be lodged at the same time as the application for naturalisation. The application process takes a minimum of three months and involves no language test or interview requirements.”

The island fared as well in ease of processing and citizenship timeline, scoring 7 and 8 respectively, but many of the Caribbean’s again edged past it.

It also scored rather poorly in due diligence – 6 out of 10 – where Dominica, Malta, and Saint Kitts and Nevis, got 10, and Grenada, Bulgaria, and Antigua and Barbuda, got 8.

A SUSTAINED increase in demand in building permits will assist Cypriot banks to improve their asset quality in the real estate sector, rating agency Moody’s says, as building permits in Cyprus reach a new high since the 2013 banking crisis.

The Statistical Service of Cyprus released data showing that the number of building permits issued in the country during the first four months of 2017 reached their highest level since the 2013 banking crisis.

According to Moody’s, during the first four months of 2017, 1,861 building permits were issued, 8% more than the year-earlier period. The increase is the result of a 38% increase in building permits for the construction of new homes, while the total value of permits issued in the first four months of 2017 was 36% higher than in 2016.

“Although Cypriot banks continue to face significant asset quality challenges, a sustained increase in demand for building permits would be a credit-positive indication of an improving operating environment for the construction and real estate industries,” the agency said in its bi-weekly credit outlook.

Moody’s added it expects that “recovering demand for new real estate and overall improvement in the sector will increase construction companies’ cash flows, with positive implications on banks’ asset quality in the construction and real estate sectors, which constituted approximately 18% of gross loans as of March 2017.”

The agency pointed out that non-performing exposures (NPEs) in these sectors, based on the Central Bank of Cyprus’ assessment of troubled loans using the European Banking Authority’s broad definition, declined to 56.4% in March 2017 from 73.0% in November 2014, with the recovering construction and real estate sectors accelerating asset quality improvements.

Furthermore, Moody’s believes that of the large domestic banks, Bank of Cyprus, the island’s largest lender, is likely to benefit most from an improvement in these sectors, which accounted for 31% of gross loans as of March 2017.

Through debt to asset swaps, the bank’s Real Estate Management Unit (REMU), has acquird €1.4 billion of property, an amount that constitutes 6% of total assets and is the largest share of any Cypriot bank, Moody’s added.

“A gradually recovering property market would facilitate REMU’s sale of these assets and reduce the likelihood of the bank recording losses,” the agency pointed out.

However, the agency noted that “notwithstanding the improving operating environment, it will take time for Cypriot banks to rehabilitate their balance sheets because of the long cure periods for restructured loans before they are reclassified as performing, and the substantial volumes of distressed debt, with system-wide NPEs at 45% of gross loans as of March 2017.”